IRS New JSEIT Unit Will Use Crowdsourcing, Cooperative Intra-Agency Intelligence and Media Alerts to Quash Emerging Tax Fraud Schemes

IRS New JSEIT Unit Will Use Crowdsourcing, Cooperative Intra-Agency Intelligence and Media Alerts to Quash Emerging Tax Fraud Schemes

IRS New JSEIT Unit Will Use Crowdsourcing, Cooperative Intra-Agency Intelligence and Media Alerts to Quash Emerging Tax Fraud Schemes

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Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

IRS New JSEIT Unit Will Use Crowdsourcing, Cooperative Inter-Agency Intelligence and Media Alerts to Quash Emerging Tax Fraud Schemes

 

The Internal Revenue Service is upping its game with a newly formed team to identify and quickly address emerging tax compliance issues. 

Announced in June, the Joint Strategic Emerging Issues Team, or JSEIT, combines expertise from units across the agency, including Criminal Investigation, Tax Exempt/Government Entities, Large Business & International, and Small Business/ Self Employed.

JSEIT’s goal is to act before a tax scheme becomes a widespread issue. Acting as a conduit between taxpayers with compliance issues and the relevant IRS division, JSEIT hopes to provide early communication to prevent abusive fraud. Any transactions that have already been identified as abusive by the IRS will not be in focus. 

So how will JSEIT find these issues? According to the Agency, the group does not have a planned agenda, but instead will rely on communications from the public, from their peers at the agency and by combing through social media posts for potential issues. Their main goal is to quickly identify emerging issues and collaborate with all relevant teams to best address issues of noncompliance. An example would be a question on a scheme that an IRS official receives at a speaking engagement.

The Dirty Dozen

Every year the IRS compiles a list of 12 common scams that taxpayers may encounter, called the “Dirty Dozen.” As many of these schemes peak as returns during filing season, with the help of JSEIT, the Agency will prioritize those that are easily replicable, with the intention to alert the public and try to stop the issue before it becomes prevalent, such as those on the Dirty Dozen. 

Micro captive-insurance companies, (captive insurance companies operating with annual gross premiums up to 2.2 million) are an example of widespread tax abuse that the IRS is looking to shut down. The taxpayer/tax-paying entity forms a company to self insure; providing coverage in exchange for a tax-deductible premium. These captive insurance companies can then elect to be taxed only on the insurance premiums received. However, the company insured by the policies can still deduct the amount of premiums it pays as an ordinary business expense under IRC Sec. 162. Due to these attractive tax benefits as well as potential for tax evasion, the IRS identified these as “transactions of interest” in 2016, resulting in audits and Tax Court decisions that ruled for the IRS.

Other potentially abusive schemes listed on the 2022 IRS report included pandemic-related scams, monetized installment sales and use of charitable remainder annuity trusts.

JSEIT’s agenda is to promote voluntary compliance. Tax professionals and taxpayers should remain vigilant, as schemes can be found in emails, on social media platforms and through online advertisements. It is vital to keep abreast of these trends and changes and seek the advice of a trusted tax advisor with international expertise to help prevent unintended tax crimes and penalties.

 

Spain deliberates ‘digital nomad’ visa programme for remote workers

Spain deliberates ‘digital nomad’ visa programme for remote workers

Cfc repatriation tax

cfc repatriation tax A representational image of a remote worker typing on a laptop. — Pexels/File
A representational image of a remote worker typing on a laptop. — Pexels/File

Spain is deliberating to issue ‘digital nomad’ visas providing non-EU citizens with the opportunity to work from anywhere in the country, while enjoying a low-cost lifestyle and tax breaks.

Visas would be issued to remote workers who work for companies outside Spain and those that generate at least 20% of their income from Spanish companies.

Details regarding the visa policy are yet to be worked out, as the law hasn’t been passed up till now; however, it is expected that initially the visa — fundamentally a resident permit — will be valid for a year and could be renewed for up to five years, subject to the applicant’s circumstances.

Even the applicant’s close relatives including their spouse or children will be eligible to join them, as reported by The Guardian.

In order to benefit from the policy, applicants must be from outside the European Economic Area and should be working remotely for at least a year. The applicant’s must have an employment contract or if they work freelance, they must prove evidence of regular work with a company outside Spain.

The applicants must also demonstrate that they will make enough earnings to be self-sufficient and have an address in Spain. However, it is not yet clear if they will have to be vetted through a criminal record check.

Instead of the standard 25% base rate, the visa holders will be taxed 15% for the first four years.

With the approval of the digital nomad visa programme, Spain will join 15 more European countries that offer similar versions of the visa and each country’s conditions vary.

A report published earlier this year stated that the average monthly income in Spain is €1,751 roughly over Rs400,000, 20% less than the average income in the EU which is €2,194.

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Open up, it’s the IRS. We’re here about the crypto tax you dodged

Open up, it’s the IRS. We’re here about the crypto tax you dodged

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The IRS has been granted a court order to collect records from a bank the agency said will help it identify US taxpayers who failed to report taxable income from crypto trades. 

Uncle Sam yesterday said it’s specifically going after records from New York-based bank M.Y. Safra, which partnered with SFOX – a cryptocurrency prime broker – to offer the latter’s customers access to cash-deposit bank accounts. SFOX users could thus use funds at M.Y. Safra to buy and sell digital coins.

The IRS was granted a similar request against SFOX in August. Both organizations were served with “John Doe” summons, a tactic used by the IRS when it investigates wrongdoing without knowing the names of the accused taxpayers.

Basically, the IRS reckons people have profited from trading cryptocurrencies via SFOX and M.Y. Safra, and haven’t declared that income nor paid the required tax on it, and so the agency wants to chase those people down and strap them into the wallet-emptying ass-kicking machine.

“The John Doe summons directs M.Y. Safra to produce records that will enable the IRS to identify U.S. taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have been properly reported on tax returns,” the agency said. 

According to the IRS, its probing into the world of cryptocurrencies has revealed “significant tax compliance deficiencies” across the industry, and that it “has strong reason to believe that many virtual currency transactions are not being properly reported on tax returns.” That said, there are many people who use cryptocoins for legit purposes, and pay due income taxes on it.

Per the IRS’s statement, SFOX has more than 175,000 registered users who have conducted more than $12 billion in transactions since 2015. The agency said it has identified “at least ten” – count ’em, ten – US taxpayers who have used SFOX but failed to report transactions. 

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With the data it gathers from M.Y. Safra, the IRS said it expects to be able to match the identities of SFOX users with Safra services “which the IRS will then be able to use in conjunction with other information to examine whether these users complied with the internal revenue laws.” 

Damian Williams, US Attorney for the Southern District of New York, where the summons was granted, said that cryptocurrency transactions aren’t exempt from tax liability. “The government is committed to using all of the tools at its disposal … to identify taxpayers who have understated their tax liabilities by not reporting cryptocurrency transactions, and to make sure that everyone pays their fair share,” Williams said. 

And another thing

Meanwhile, America’s Commodity Futures Trading Commission has filed and settled charges against blockchain outfit Ooki (formerly known as bZeroX) and its founders. 

The company and its pair of operators were collectively charged with illegal off-exchange asset trading, operating as unregistered futures commission merchants, and failing to adopt a customer identification program, as is required by the Bank Secrecy Act. 

The CFTC announced its settlement in the case along with the filing, stating that the respondents (the company and its two founders) will have to pay a $250,000 penalty, as well as promising to not to violate of the Commodity Exchange Act and CFTC regulations. ®

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Jack Brister Featured in Live Event: Estate Planning and Investment Strategies for Multi-Nationals on Oct. 25, 2022

Jack Brister Featured in Live Event: Estate Planning and Investment Strategies for Multi-Nationals on Oct. 25, 2022

Jack Brister Featured in Live Event: Estate Planning and Investment Strategies for Multi-Nationals on Oct. 25, 2022

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

Complex Tax and Non-Tax Issues to Be Covered in Depth at Event Produced by European American Chamber of Commerce (EACCNY) on Oct. 25, 2022, 8:30-10:30 a.m. Register to attend here.

 

Trust and estate planning and investment strategies for multinationals is a complex topic about which International Wealth Tax Advisors founder Jack Brister has encyclopedic knowledge.

An update on the tax rules and strategies multi-nationals must follow in these areas is the topic of a live event at which IWTA Founder Jack Brister  is participating on Tuesday, Oct. 25, 2022. The free event, produced by the European American Chamber of Commerce (EACCNY) takes place from 8:30 to 10:30 a.m. at the New York City headquarters of Offit Kurman.

Among the topics to be discussed are planning for U.S. tax compliance for non-resident citizens; dual citizens and green card holders; foreign tax trusts vs. U.S. tax trusts; along with income, gift, and estate planning for non-residents with U.S. children.

Other speakers on the panel moderated by EACCNY Executive Director Yvonne Bendinger-Rothschild include EACCNY members Diane Roskies, Counsel,Offit Kurman, Christopher Wright, Partner, CBIZ Marks, Paneth & MHM and Robert M. Nemzin, Senior Wealth Planner, HSBC. Early registration is encouraged.

“As a specialist in international wealth retention strategies for over 30 years, I will be sharing knowledge of solutions to complex cross-border tax issues,” says Jack Brister, international tax consultant and Founder of International Wealth Tax Advisors. “Failing to understand the rules results in significant penalties. IWTA helps clients to navigate the rules and regulations to not only avoid the penalties, but reap the fullest rewards possible from playing by the rules.”

The IWTA team consults extensively for foreign and dual citizens, businesses and families with U.S assets, many of which are also holders or beneficiaries of foreign or U.S. trusts.  Jack’s extensive experience working with the IRS along with his vast knowledge of complex tax codes and tax laws enables him to help clients avoid costly penalties and uncover tax saving opportunities to grow and maintain wealth.

IWTA clients include multinational families, investors, international businesses and U.S. taxpayers working and living abroad. Clients hail from and reside in various regions of the world including Western Europe, Singapore, India, Australia, New Zealand, Brazil, Peru, Ecuador, Mexico, and the Middle East.

For more information or to book an appointment with Jack Brister to discuss your trust and estate planning needs, click here.

 

 

 

International Tax Roundup: Third Quarter 2022

International Tax Roundup: Third Quarter 2022

International Tax Roundup: Third Quarter 2022

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

International Tax Roundup: Third Quarter 2022

2022 has been an unpredictable year amidst soaring inflation and geopolitical unrest. In the tax realm, governments have been trying to hedge against this uncertainty by shoring up their budgets and addressing inconsistent tax enforcement. Unsurprisingly, much of this government activity has centered around taxpayers with means — high net worth domestic taxpayers and foreign investors. Below, we roundup some significant international tax developments concerning high net worth individuals and foreign investors in the first three quarters of 202

Singapore Hikes Taxes on Real Estate

Singapore has long been a top destination for foreign real estate investors due to its political and economic stability and low tax climate. During the COVID-19 pandemic, its popularity soared even higher as high net worth remote workers — particularly from Hong Kong — tried to establish roots in Singapore. Housing prices skyrocketed, causing the Singaporean government to impose higher taxes on certain residential property transactions.

In both residential and non-residential real estate transactions, Singapore assesses a Buyer’s Stamp Duty on property bought or acquired in the country. The taxable amount is the higher of either the purchase price or the property’s market value, and the government applies the tax on a graduated basis. In the case of residential transactions, the first $180,000 is assessed at a 1 percent rate, the next $180,000 at a 2 percent rate, the next $640,000 at a 3 percent rate, and any amount remaining after that is taxed at a 4 percent rate.

In May, the Singaporean government announced that it would apply a new 35 percent tax rate on residential property that is transferred to a living trust. That 35 percent tax will be assessed as an Additional Buyer’s Stamp Duty (ABSD). The new tax also marks the government’s latest change to the ABSD regime. In late 2021, the government increased the ABSD rate on foreigners buying residential property from 20 percent to 30 percent.

The Supreme Court Takes On FBAR

Over the past few years, federal district courts around the country have addressed a torrent of litigation on an unsettled and costly question in FBAR litigation — how should penalties for non-willful violations be calculated? The federal statute in play, 31 U.S.C. 5321(a)(5)(A), says non-willful FBAR penalties apply per violation but it does not specify whether a violation occurs for each unreported account or for each annual FBAR that is filed, which is a yearly compilation of a taxpayer’s foreign accounts.

The issue made its way up to the federal circuit courts of appeal, where a circuit split quickly developed. The Ninth Circuit has ruled that the penalties apply per form (U.S. vs. Boyd; No. 19-55585; 991 F.3d 1077), while the Fifth Circuit has ruled that they apply per account (U.S. vs. Bittner (No. 20-40597, 5th Cir. 2021)). The taxpayer in Bittner then petitioned the Supreme Court for a writ of certiorari. Historically, the Supreme Court has rarely handled tax cases, but in this case it has decided that the circuit split is too important to ignore. In June 2022, the Supreme Court granted the petition, and the court’s decision will have extremely important ramifications, whether it rules in favor of taxpayers or the IRS.  

In Bittner, the Fifth Circuit said that the per-form interpretation clashed with the statutory text of the Bank Secrecy Act and its corresponding regulations.

The background in Bittner was that the government assessed $2.72 million in civil penalties against businessman Alexandru Bittner for failing to report his foreign financial accounts between 2007 and 2011. The U.S. District Court for the Eastern District of Texas reduced the penalties to $50,000, saying they applied per form and not per account.

On appeal, the government contended that the district court focused too narrowly on the regulations under 31 U.S.C. § 5314 to determine what constitutes a violation and ignored the text of 31 U.S.C. § 5314 itself. The Fifth Circuit, in its analysis of 31 U.S.C. § 5314, found that the text creates a statutory requirement to report each qualifying account or transaction. The regulations create a requirement to file those foreign account reports on an FBAR form.

IRS Eyes High Net Worth Taxpayers

The Biden administration’s newly enacted Inflation Recovery Act earmarks $80 billion for the IRS, which is a significant expansion of the Service’s budget. Over the past several years, Congress has significantly cut the IRS’ budget, which has caused a decline in enforcement. Lawmakers are expecting the IRS will increase its enforcement activity with the new cash, but the government says it will only focus on households earning more than $400,000. 

A Global Look at Wealth Taxes

Lastly, in the wake of the pandemic, wealth taxation has become a trending topic around the world, and several governments have considered wealth taxes on high net worth individuals to raise revenue for public services. They include Colombia, South Africa, and Sri Lanka. 

Even though wealth taxation has drawn increased attention around the world, the reality is that wealth taxes have generally been difficult to enact for several reasons, including valuation and concerns about alienating wealthy taxpayers. Some governments have rejected the imposition of new wealth taxes based on fears that those most affected would relocate to more tax-friendly locales or reconsider their domestic investments. Nonetheless, this will be an area to watch in the coming months. 

Conclusion

These developments show that governments are actively reassessing their tax regimes in a tough time of economic uncertainty, and are willing to implement new strategies in order to raise revenue. Pan-globally, high net worth taxpayers and foreign investors should anticipate that taxing authorities may increase scrutiny into their financial affairs. Taxpayers who wish to keep abreast of these trends and changes should seek the advice of a trusted international tax advisor. 

 

The Supreme Court Gets a Chance to Revisit America’s Imperialist Past

The Supreme Court Gets a Chance to Revisit America’s Imperialist Past

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Who gets to be a U.S. citizen at birth? This question is fairly simple when asked almost anywhere in the United States. If you are born on U.S. soil and you are not the son or daughter of a foreign diplomat stationed here at the time, you are a citizen of this country. The Supreme Court is now considering a case that would require it to decide whether that rule should apply in the only part of the U.S. where it currently does not: the islands of American Samoa.

The case, Fitisemanu v. United States, involves three plaintiffs who originally hail from American Samoa but now reside in Utah. (The petition for review was filed in April; the Department of Justice filed its reply briefs at the end of August.) They are legally considered U.S. nationals, a subcitizenship status of sorts where they still owe allegiance to the U.S. but, unlike Americans on the mainland and in all other territories, did not receive citizenship at birth. This distinction has limited their lives in myriad ways. The case’s namesake, John Fitisemanu, is suing because he cannot lawfully cast a ballot, according to the petition for review. Co-complainant Pale Tuli cannot pursue his preferred vocation as a police officer because Utah law restricts the job to U.S. citizens. And the third plaintiff, Rosavita Tuli, cannot sponsor her parents through the immigration process in the manner to which citizens of the U.S. are entitled.

American Samoa is unique in this regard. Congress has granted birthright citizenship to everyone born in the other U.S. territories—ranging from Puerto Rico and Guam to the U.S. Virgin Islands and Northern Mariana Islands—through federal legislation. While there have been legislative attempts to close this gap, these have met some resistance from local authorities. Both the American Samoan government and the territory’s only congressional delegate moved to intervene in the lawsuit. They argued that imposing birthright citizenship would infringe upon the island’s cultural traditions and right to self-determination.

A federal district court judge ruled in favor of the plaintiffs, however, drawing upon the 1898 case Wong Kim Ark v. United States. That landmark decision helped establish that anyone born on U.S. soil, with the exceedingly rare exception of children of foreign diplomats, automatically acquired U.S. citizenship at birth. The Tenth Circuit Court of Appeals overturned the district court’s ruling in a split decision, concluding that the lower court had applied the wrong set of precedents to the case.

“Between these competing frameworks, the Insular Cases provide the more relevant, workable, and, as applied here, just standard,” Judge Carlos Lucero wrote. “This is so for several reasons: 1) the Insular Cases were written with the type of issue presented by this case in mind, whereas Wong Kim Ark was not; 2) the district court overread the weight accorded English common law by Wong Kim Ark; and 3) the Insular Cases permit this court to respect the wishes of the American Samoan people, whereas Wong Kim Ark would support the imposition of citizenship on unwilling recipients.” Judge Timothy Tymkovich concurred in part, deferring to historical precedent and congressional discretion but declining to apply the Insular Cases outright.

His reticence is understandable. The Insular Cases are among the most controversial precedents that still carry legal weight in American courts. At the close of the nineteenth century, the U.S. acquired a constellation of colonial possessions in the Atlantic and Pacific Oceans by winning the Spanish-American War. Those acquisitions immediately raised questions about when and how the Constitution’s protections applied to the new territories. Did the Constitution follow the flag, so to speak, or could the new possessions be administered under a different type of constitutional order?

In a series of decisions in the early twentieth century, the Supreme Court took the latter approach. Starting with the 1901 case Downes v. Bidwell, the justices distinguished between incorporated territories and unincorporated territories. In incorporated territories, like those on the American frontier that eventually became states, the Constitution carries its full weight. In unincorporated territories, the high court ruled, inhabitants had certain fundamental rights but also did not enjoy the automatic protections of the Bill of Rights or other constitutional measures.

The rulings are widely derided as imperialistic and discriminatory. In some of them, the justices wrote in unabashedly racist terms to muse about whether the nonwhite inhabitants of the new territories were properly suited for “Anglo-Saxon” institutions like jury trials. So condemned are the Insular Cases that the Justice Department under presidents from both parties often disclaims any reliance on them when arguing cases about the territories before the Supreme Court. They nonetheless remain on the books as the prevailing framework for governing the territories where roughly five million people live.

Earlier this year, in the case United States v. Vaello-Madero, the Supreme Court considered whether Congress could lawfully exclude U.S. citizens who live in Puerto Rico from drawing upon a Social Security benefit program that would be available to them if they lived in an Arctic cabin in Alaska, a Central Park penthouse in New York, anywhere else in the 50 states, or the District of Columbia. In an 8–1 ruling by Justice Brett Kavanaugh, the court upheld Congress’s decision to omit Puerto Rico from the program.

Gorsuch sided with the federal government as a matter of precedent. He then wrote a concurring opinion where he forcefully called for the court to “revisit” the Insular Cases whenever it had the opportunity. “The flaws in the Insular Cases are as fundamental as they are shameful,” he wrote. “Nothing in the Constitution speaks of ‘incorporated’ and ‘unincorporated’ Territories. Nothing in it extends to the latter only certain supposedly ‘fundamental’ constitutional guarantees. Nothing in it authorizes judges to engage in the sordid business of segregating territories and the people who live in them on the basis of race, ethnicity, or religion.” Justice Sonia Sotomayor, whose parents were Puerto Rican, echoed his call to revisit them in her dissent from that case.

In their petition for review in Fitisemanu, the plaintiffs cited Gorsuch’s dissent and called upon the justices to follow his lead. They also stressed the high stakes of the case before them. “The importance of the question presented is indisputable,” they told the court. “At stake is not just the meaning of a core constitutional provision that defines the boundaries of a foundational right—U.S. citizenship—on which many other rights are premised, but also whether that constitutional provision even has a fixed meaning that cannot be turned on and off based on evolving or subjective factors.”

One of the most unusual friend of the court briefs came from two women who were the descendants of plaintiffs in past Supreme Court cases involving citizenship. One was the great-granddaughter of Isabel Gonzalez, the namesake of a 1904 case where the court elided whether Puerto Ricans were U.S. citizens at the time. The other woman was the great-great-granddaughter of Dred Scott, who asked the Supreme Court to recognize his freedom in 1859. The justices’ decision not only to rule against Scott but also to declare that no one of African descent could ever become a U.S. citizen and that the Missouri Compromise was unconstitutional, eventually led to the Civil War.

After the war ended, Congress and the states ratified a constitutional amendment to establish citizenship in the clearest possible terms. “The Fourteenth Amendment is unequivocal,” the two women told the court. “Citizenship in no way depends on race, status, or the particular geographic region of the United States in which a person was born or lives. Instead, under the Citizenship Clause, ‘all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States,’ as well as any ‘State wherein they reside.’” Their brief is a potent reminder of the extraordinary stakes that surround questions of citizenship, as well as the long shadow of history that can fall upon those who were denied it.

The Justice Department, for its part, urged the justices not to take up the case and claimed it wasn’t grounding its position in the Insular Cases. “The government’s argument here does not rest on that framework,” it argued in its reply brief. “The government does not rely on the premise that citizenship is not ‘fundamental,’ or on the view that extending birthright citizenship to American Samoa would be ‘impracticable and anomalous.’ And the government in no way relies on the indefensible and discredited aspects of the Insular Cases’ reasoning and rhetoric that [the plaintiffs] highlight here.” Instead, they argued that the Citizenship Clause does not automatically apply to any territories and narrowly construed Wong Kim Ark by noting that the case’s namesake was born in the state of California.

There is no way to know in advance whether the justices will take up a specific case. If they decline to do so here, they may be influenced by the arguments raised by the government of American Samoa itself, which opposed the plaintiffs’ effort to get the courts to extend birthright citizenship to the territories. “Their contrary view would threaten fa’a Samoa, upend well over a hundred years of settled law and practice, and deprive the American Samoan people of their basic right to determine their own status through the democratic process,” the government told the court in a reply brief, referring to their term for the traditional Samoan way of life.

“Finally, it bears noting that even if this Court were inclined to reconsider and overrule the Insular Cases, it would be remarkably ironic to take that step in a case where those decisions have been cited not to perpetuate racist or imperialist doctrines, but instead ‘to preserve the dignity and autonomy of the peoples of America’s overseas territories,’” they concluded, quoting from Sotomayor’s dissent in Vaello-Madero. The plaintiffs, as one might expect, strongly disputed that assertion. “Extending citizenship has not impaired cultural preservation or self-determination in any other U.S. territory, and there is no reason to suppose the result would be different in American Samoa,” they argued in a reply brief.

Even if the justices decline to take up the question in this specific case, it seems likely that they will inevitably be compelled to decide whether the Insular Cases should continue to apply in a postcolonial world. At issue, after all, is not just whether a justice or group of justices got it wrong more than a century ago when cases involving the new territories came before them. It is also about whether millions of Americans should still exist in that liminal constitutional space today, and whether it should continue to shape their lives and destinies going forward.

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Australian Tax Office is the benchmark in how to build a modern data organisation

Australian Tax Office is the benchmark in how to build a modern data organisation

Cross border tax advice

“Computers don’t get tired,” notes Marek Rucinski, the head of data and analytics at the ATO.

The ATO has more than 150 AI applications looking at these data flows, and was an early adopter of data visualisation and algorithms to better manage the revenue risk.

Much of this work was scattered across the agency among key teams who applied analytics to identify outliers for further investigation.

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“Computers don’t get tired,” says Marek Rucinski, ATO deputy commissioner and head of data and analytics. Olive + Maeve

Whether it was journalists claiming their entire library as a deduction or doctors writing off two cars as an expense, computer models began to be far better at seeing tax avoidance than humans.

The original deployment of analytical tools was relatively organic and, like many agencies now seeking to embrace the data age, the ATO struggled to scale its analytic play.

Rucinski was hired from Accenture in 2018 and set about industrialising the ATO’s approach.

The initial task was to build the infrastructure to make the data available to business units in formats they could easily manipulate.

Training staff in visualisation tools helped “democratise” the data and build literacy, and also tapped an incredible pent-up demand from the business units to play in the smart data space.

Data cataloguing was also critical, so the organisation could have a high degree of confidence in the pedigree, quality and sensitivity of the data. The ATO has long had a healthy obsession with data security and privacy, driven partly by legislative guard rails that can lead to ATO officials being jailed for unauthorised data breaches.

Cataloguing also enables a taxonomy to be developed. Consistently tagging data has long been the secret sauce for enabling the effective integration of disparate data sets.

Similarly, building a culture of transparency and ethical behaviour has been central to building trust both within the ATO and with the many private parties that now share data with the agency. There is an elaborate ethical framework the ATO continues to develop as it pushes into the world of AI, robotic automation and straight-through processing.

Funding data infrastructure is perhaps the key challenge for any public entity seeking to transform its business. Rucinski says this requires you to play the organisational “chessboard”.

“I was very conscious that it is very hard to ask for a lot of money to build foundational things that take a long time to make real,” he says.

When people talk about artificial intelligence, they sometimes think it’s magical in nature. Well, it isn’t.

Marek Rucinski, ATO head of data and analytics

“It’s like building a Taj Mahal. It’s a very thankless task, and it’s never finished. So the strategy here was to use a lot of the energy and a lot of demand that was in the business through either taskforce funding or a very clear legislative agenda that we had to follow or the strategic priorities the organisation had.”

These included increasing pre-fill, reducing fraud or being more sophisticated with the risk models by having a more integrated view of the client base.

“It wasn’t like big bang, it was very much semi-stealth,” Rucinski says.

This approach, he says, has pluses and minuses.

“The pros are that, obviously, it’s extremely value-centric, you can always explain and link what you do to the value in developers. And therefore the funding equation becomes much clearer and much stronger.

“The contrast to that is sometimes you don’t build things in a sequence that is ideal, or the timeline that is ideal. So you have to be flexible in that. And you have to play the chessboard in a bit more complex fashion. But I think that’s the reality for most organisations.”

A hub-and-spoke model was established, and the central team was charged with not just setting the standards, but also actively working with the business.

Getting your hands dirty is critical to the successful maturing and embedding of data and analytics into an agency, Rucinski says.

He has advice for other agencies looking at how to scale their data play: “The key success factor for a hub-and-spoke organisation is for the hub to have operational responsibilities, not just pure standards or centre of excellence.”

Without operational responsibility, the hub won’t have the weight in the organisation and will have no credibility, Rucinski says.

“If you have operational responsibilities, then you are in the trenches with the business.”

Cross border tax advice Mysticism of data science

This also gives the core data team an intimacy with the business units and the ability to understand the pressure points and to respond.

His team has developed more than 150 advanced analytic tools, many using some form of AI. These include applications that pre-fill assessments with data from banks and employers, reducing “mistakes” – either deliberate or accidental.

Rucinski says it was important to demystify these applications.

“The way that I tried to approach it with the team, and with the leadership team, was to really try to demystify it because I think there’s still an aura of mysticism around data science,” he says.

This is particularly true of artificial intelligence.

“When people talk about artificial intelligence, they sometimes think it’s magical in nature. Well, it isn’t. You can lift the lid and see what’s sitting inside a black box if you approach it in a more mechanistic way.”

Indeed, as Rucinski observes, there is now a large library of algorithms and AI apps available commercially or through open source.

The ATO sits on 50 or 60 petabytes (one petabyte equals 1 million gigabytes) of data, and it is creating an organisation that can effectively use this data that is becoming the hallmark of a modern data-centric agency.

“Increasingly, organisations’ ability to use the data they collect [gives them] the edge because accurate algorithms are becoming relatively commercialised and standardised, you can get them off the shelf,” Rucinski says.

“So that’s no longer a differentiating factor. The differentiating factor is how you assemble them.

“There’ll be more data coming. Our ability to ingest, curate, catalogue the data at an industrial scale and speed is going to be essential because otherwise we are creating a warehouse full of stuff that we cannot use downstream.”

The ATO is moving its data practice to the cloud, an initiative Rucinski says is inevitable.

“Most of the current applications are becoming cloud native. So if we want to have contemporary applications and contemporary client experience or contemporary interactions with our partners and the broader ecosystem, it has to be cloud-centric.”

New laws that finally enable industrial sharing of data between Commonwealth entities represents the next frontier for the broader data transformation of government.

If the ATO is the high watermark, there are many agencies still playing in the sandpit. Building modern data capability across the Australian Public Service remains perhaps the most significant challenge in the reform of the federal public sector.

The ATO holds many of the most valued data sets, but has long been reluctant to share them. Pivoting the organisation into this new era of cross-government data integration will take significant cultural change.

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

King Charles III won’t have to pay inheritance tax

King Charles III won’t have to pay inheritance tax

International tax consultant

In the wake of Queen Elizabeth II’s death last Thursday, King Charles III inherited a realm of wealth and he doesn’t have to pay inheritance tax on any of it.

Driving the news: A rule introduced in 1993 by the U.K. government safeguards the royal family’s assets from being wiped out if two monarchs were to die in a short period of time, Business Insider reports.

  • The Queen Mother passed away 20 years ago in 2002, exercising the first part of the provision.

By the numbers: Charles inherits the Duchy of Lancaster estate, which racked in $27 million in revenue for the Queen last year.

  • The Crown Estate, estimated to be worth over $34.3 billion in assets, will now belong to Charles III, CBS reports.
  • Prince William, Charles’ eldest son, inherited the $1 billion Duchy of Cornwall estate from him. 

Why it matters: Members of the royal family do not have to pay the 40% levy on property valued at more than $377,000 while their constituents do.

  • However, the Queen started paying income and capital gains tax on the estate in 1993 of her own accord. Charles may decide to do the same.

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Why King Charles won’t have to pay inheritance tax on Duchy of Lancaster estate

Why King Charles won’t have to pay inheritance tax on Duchy of Lancaster estate

Fatca filing

King Charles III can avoid paying millions in inheritance tax on the Duchy of Lancaster estate due to an old rule designed to protect the Royal Family’s wealth.

His Majesty automatically inherited the estate – worth over £652m – following the death of his mother Queen Elizabeth II last week.

Under UK law, inheritance tax is paid at 40% if you leave assets valued above a certain threshold to your loved ones after you die.

King leads procession behind Queen’s coffin – live updates

But the King will not have to pay the levy because of a rule introduced by the UK government in 1993, which said inheritance tax does not have to be paid on the transfer of assets from one sovereign to another.

Then Conservative Prime Minister Sir John Major said the circumstances of a hereditary monarchy were “unique” and “special arrangements” were required.

He suggested assets of the monarchy were at risk of being “salami-sliced away” through capital taxation over many generations.

He told the Commons: “I believe that is necessary to protect the independence of the monarchy, and I would not wish to detract from that independence in any way.

“The concerns that I would have were the arrangements to be any other would be the danger of the assets of the monarchy being salami-sliced away by capital taxation through generations, thus changing the nature of the institution in a way that few people in this country would welcome.”

‘Clearly inappropriate’

A Memorandum of Understanding on royal taxation from 2013 also states that it would be “clearly inappropriate” for inheritance tax to be paid on assets “which are held by the Queen as sovereign rather than as a private individual”.

It said the monarchy needs “sufficient private resources” to perform its role in national life and to have a degree of financial independence from the government.

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King Charles greets crowds in Edinburgh

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The document said the Prince of Wales confirmed that he intends that these arrangements will apply to him on his accession to the throne.

Sky News has contacted Buckingham Palace for comment.

The Duchy of Lancaster estate generated revenue of £24m and had assets worth more than £650m at the end of March this year, according to its financial records.

The monarch is not legally obliged to pay any tax in the UK. But the Queen began to pay income and capital gains tax on a voluntary basis in 1993, and King Charles is expected to do the same.

The former Prince of Wales also voluntarily paid tax on his income from the Duchy of Cornwall estate, which has now been passed to Prince William, the new Prince of Wales.

Anyone other than King Charles who has inherited private assets from the Queen will have to pay inheritance tax.

Explaining the tax break, Fisher Jones Greenwood Solicitors has previously said the exemption is designed “to safeguard the erosion of the Sovereign’s wealth”.

They said: “The monarch doesn’t work or trade to ‘grow’ their estate as a normal individual would during their lifetime.

“If the monarch’s estate was repeatedly subjected to inheritance tax then their wealth would deplete dramatically.”

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Thousands of Irish families to benefit as Taoiseach reveals ‘no appetite’ to make major tax change

Thousands of Irish families to benefit as Taoiseach reveals ‘no appetite’ to make major tax change

What is a foreign trust

THE government will not inflict more misery on struggling families by imposing extra tax on the amount of money parents can leave their children when they die.

The Taoiseach has said there is “no appetite” in Government to reduce the inheritance tax threshold as will be proposed by the Commission on Taxation and Welfare.

what is a foreign trust Martin said there's no appetite in Government to make the change

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Martin said there’s no appetite in Government to make the changeCredit: PA:Press Association

what is a foreign trust The news is a major boost for Irish families

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The news is a major boost for Irish familiesCredit: Getty Images – Getty

Mr Martin said he believed many families would be “disadvantaged” if it was reduced.

He said: “I don’t believe there’s an appetite in Government to reduce that threshold.

“Many, many families and family homes I think would be disadvantaged by that.

“We’re talking after all about people who have bought their family homes with after income tax.

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“Many people throughout their lives pay tax. And in fact, our taxation system is very progressive.

“Those on the highest earnings, pay the highest amount of tax. I think the top 20 per cent pay up to 80 per cent of income tax for example.

“So I think that proposal to say to people you’ve worked hard all on your life, we’ve bought your house….but now actually we want to take more off you when you die and you can’t leave it to family members, I think there’s an issue with that in terms of fairness.”

His comments come after reports suggested the Commission on Taxation and Welfare has proposed to drastically reduce the amount of money parents can leave to their children tax-free.

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A report by the Commission is set to be published on Wednesday.

He added that the Government would look at the report in its entirety but “I don’t see that happening”.

Mr Martin made the comments at his parliamentary party think-in meeting at the Mullingar Park Hotel in Co Westmeath today.

He said the Government would use the Budget to help people with the increased cost of living.

Martin said: “We are now looking at price increases in energy that we have not seen the likes of ever before, not even in the terrible crises of the 70s when oil prices went up very high.

What is a foreign trust ‘HIGH LEVELS OF INCREASES’

“We’re looking at very, very high levels of increases, which are impacting on people’s livelihoods under household disposable incomes, and also threaten enterprises and threatened jobs so once again the Government will have to intervene to protect people first of all, in terms of basic incomes, and also to make sure that we protect jobs.”

He said the Government would also work with the European Union through the crisis.

He said: “The European Union will be making its intervention in the marketplace to try and stabilise the energy market,.

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“But we also in the next number of weeks through a cost of living package, and the budget will bring in measures to alleviate the pressures on people insofar as we can and to the best and most substantial way that we can.”

He added that Finance Minister Paschal Donohoe and Public Expenditure Minister Michael McGrath are working on proposals with the three party leaders and that meetings would be held later in the week on the matter.

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This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.